DTEK: THE LEADER IN UKRAINIANCOAL & ENERGY MARKETSSEPTEMBER 2011
CONTENTS DTEK at a glance Ukrainian energy market overview Operations Financials Back-up                             ...
LARGEST PRIVATE VERTICALLY INTEGRATED ENERGY COMPANY IN UKRAINE                                                           ...
LONG-TERM GOALSFuel: Coal mining > 50 m t                             Energy Gas production > 3 bn m3                   ...
STRONG PROFIT GROWTHRevenue, EBITDA and Net Profit, UAH mln               Revenue                EBITDA            Net pro...
CONTENTS DTEK at a glance Ukrainian energy market overview Operations Financials Back-up                             ...
POWER GENERATION MARKET      Thermal power plants are the only generation assets in Ukraine with available capacity to mee...
THERMAL POWER GENERATION MARKET              GenCos share of thermal power generation, %                                  ...
UKRAINIAN ENERGY CONSUMPTION TRENDS  Electricity demand is expected to grow at CAGR +3.7% in 2011-2020. In the mid-term (2...
HOUSEHOLD TARIFFS ARE AMONG THE LOWEST IN EUROPE      Average households electricity rates in Europe, €/ Kwh              ...
UKRAINIAN COAL AND GENCOS CONSUMPTIONCoal remains by far the most important fuel for Ukrainian thermal GenCos, accounting ...
CONTENTS DTEK at a glance Ukrainian energy market overview Operations Financials Back-up                             ...
1H 2011: СOAL PRODUCTION     DTEK runs some of the most efficient and high quality mines in Ukraine, maintaining constant ...
1H 2011: THERMAL POWER GENERATION        DTEK’s TPPs are among the most efficient on Ukrainian power generation market. Vo...
1H 2011: POWER SUPPLY         Electricity transmission & sales, Mwh                            Nominal vs. Actual transmis...
1H 2011: COAL & ELECTRICITY EXPORTS    DTEK is the largest privately-owned exporter of coal and electricity in Ukraine wit...
POWER PLANTS MODERNIZATION                              Vostokenergo.                                            Vostokene...
AMBITIOUS CAPEX PLANS      Total Capex, USD mln*                                                                         C...
CONTENTS DTEK at a glance Ukrainian energy market overview Operations Financials Back-up                             ...
OUTSTANDING FINANCIAL PERFORMANCE     Revenue, UAH mln                                               EBITDA, UAH mln     2...
EBITDA GROWTH MAIN DRIVERS                                                 2 199                                          ...
HEALTHY DEBT PROFILE          Loan portfolio, USD mln                                    Loan maturity profile*, USD mln  ...
LOW LEVERAGE LEVELS    Key leverage ratios                                                                  Credit ratings...
DTEK’S LEVERAGE IS WELL BELOW INDUSTRY PEERS    Debt/EBITDA, 2010 actual                       DTEK‟s leverage is well bel...
CONTENTS DTEK at a glance Ukrainian energy market overview Operations Financials Back-up                             ...
SELECTED FINANCIALS 2005 – 2010, UAHmln UAH                                     2005     2006     2007     2008     2009  ...
SELECTED FINANCIALS 2005 – 2010, USDmln USD                                     2005     2006     2007     2008     2009  ...
ENERGY MARKET OF UKRAINE: REGULATORY FRAMEWORKS                       Power generation market is regulated by:Regulatory f...
UKRAINE ЕNERGY MARKET: REGULATION MODELS EVOLUTIONCurrent model of the Wholesale Energy market (single buyer pool)        ...
UKRAINE ENERGY MARKET: TRANSITION TO RAB MODELSince 2007, The National Electricity Regulatory Commission, together with a ...
MEMBERSHIPEU-Ukraine   Eurelectric   European      American      European          UN Global   US-UkraineBusiness         ...
OPERATING ASSETS OWNERSHIP       Coal production                       Power generation         Electricity supplyDTEK Pav...
This document may contain forward-looking statements related to planned measures or future financial indicators of DTEK.Ac...
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dtek_management_presentation_september_2011

  1. 1. DTEK: THE LEADER IN UKRAINIANCOAL & ENERGY MARKETSSEPTEMBER 2011
  2. 2. CONTENTS DTEK at a glance Ukrainian energy market overview Operations Financials Back-up 2
  3. 3. LARGEST PRIVATE VERTICALLY INTEGRATED ENERGY COMPANY IN UKRAINE Power Coal production Thermal power generation supply & sales Share in coal mining in Ukraine Share in power generation in Ukraine¹ Share in power supply in Ukraine² 11,5% 18,8% DTEK 8.0% DTEK DTEK 12.0% 28.1% 18,7% 27.3% 23,7% DTEK Dneproenergo Zapadenergo DTEK Centrenergo Affiliated with DTEK Donbassenergo Other1 As of 30.06.2011, DTEK owns 47.55% of Dneproenergo, 39.98% of Kievenergo and 25.06% of Zapadenergo Source: DTEK. The Main Data Processing2 Center of NPC Ukrenergo As of 30.06.2011, DTEK owns 30.6% of Donetskoblenergo and 39.98% of Kievenergo 3
  4. 4. LONG-TERM GOALSFuel: Coal mining > 50 m t Energy Gas production > 3 bn m3 Society ConsumersPower Generation: Thermal generation > 16 Gwt Renewable energy sources > 1 Gwt People Ukraine “Plus”Power Supply: Electric power supply > 60 bn Kwt h Efficiency Thermal power supply > 15 000 Gcal 4
  5. 5. STRONG PROFIT GROWTHRevenue, EBITDA and Net Profit, UAH mln Revenue EBITDA Net profit Revenue growth drivers: 30000 - Volumes + 3 539 mln - Prices & Mix +1 883 mln 24 294 - Exports + 2 405 mln 25000 20000 18 453 15 009 15000 12 969 10 625 10000 8 969 6 141 5 049 5 068 5000 3 784 3 457 3 565 2 425 2 857 2 643 2 201 777 268 1 257 1193 856 1 288 493 119 0 2005 2006 2007 2008 2009 2010 1H 2010 1H 2011 YoY growth: REVENUE +33% +78% +45% +16% +62% +74% EBITDA +62% +93% +43% +3% +72% +92% NET PROFIT +84% +142% -90% +619% +234% +71% All figures for 1H 2011 are actual Source: DTEK 5
  6. 6. CONTENTS DTEK at a glance Ukrainian energy market overview Operations Financials Back-up 6
  7. 7. POWER GENERATION MARKET Thermal power plants are the only generation assets in Ukraine with available capacity to meet mid- term electricity consumption growth Breakdown of Ukraine’s electricity production, gross Power plants output to WEM, TWh Nuclear Nuclear Power Plants 41, 5 47% Others Thermal Power Plants 32 ,6 9% Combined Heating Power Plants 7,5 Hydro 7% Hydro Power Plants 6 ,2 Non-conventional Power Plants 0,2 Thermal 37% Installed capacity, MWt Installed capacity utilization, % Thermal & Combined 33 774 Heating Power Plants Nuclear Power Plants 73 Nuclear Power Plants 13 835 Thermal & Combined Heating 31 Power Plants Hydro Power Plants 5 458 Hydro Power Plants 27* All figures are 1H 2011 actual Source: DTEK, Main Data Processing Centre of NPC Ukrenergo 7
  8. 8. THERMAL POWER GENERATION MARKET GenCos share of thermal power generation, % GenCos output to WEM, TWh Vostokenergo 27% Vostokenergo 8,9 Centrenergo Dneproenergo 7,8 19% Centrenergo 6,2 Dneproenergo 24% Zapadenergo 6,1 Donbassenergo 11% Donbassenergo 3,7 Zapadenergo 19% GenCos installed capacity, MWt GenCos Average tariffs, kop/ kWt h Dneproenergo 4651* 60,00 53,33 44,80 Zapadenergo 4650 40,00 33,24 36,75 Centrenergo 24,89 4600** 20,9 20,00 17,26 Vostokenergo 4157 0,00 Donbassenergo 2705 2005 2006 2007 2008 2009 2010 1H 2011* Dnepronergo’s installed capacity is net of suspended oil & gas power units, ** Centrergo’s installed capacity is net of suspended oil & gas power units,and out of service units (8185 MWt including all units) (7600 MWt including all units) * All figures are 1H 2011 actual Source: DTEK, the Main Data Processing Center of NPC Ukrenergo 8
  9. 9. UKRAINIAN ENERGY CONSUMPTION TRENDS Electricity demand is expected to grow at CAGR +3.7% in 2011-2020. In the mid-term (2011-2015) industry electricity consumption is expected to grow at CAGR +2.8%. Households demand should outperform the industrial sector with CAGR +6%, coming from the lowest in Europe electricity consumption per capita levels. Electricity consumption by categories, Mwh 158 689 148 528 147 893 147 483 143 463 134 506 Households 137 922 29 011 31 920 39 382 28 276 Other non-industrial consumers 26 444 37 674 34 396 Commercial households Construction Transport 77 866 79 761 82 508 78 351 Agriculture 77 244 71 517 63 985 Industry 2005 2006 2007 2008 2009 2010 2011eAll figures are 1H 2011 actual Source: DTEK. National Electricity Regulatory Commission of Ukraine (NERC) 9
  10. 10. HOUSEHOLD TARIFFS ARE AMONG THE LOWEST IN EUROPE Average households electricity rates in Europe, €/ Kwh  The average household tariff for the EU-27 is 0,16 Ukraine min 0,025 below 150 kWt per month €/Kwh. with the striking difference to Ukraine at 0,025 - 0,033 €/Kwh. Ukraine max above150 kWt per month 0,033  To bring Ukrainian tariffs to an economically justified level a four-fold increase is needed. Russia 0,08 Romania 0,11 Latvia 0,11 Lithuania 0,13 Tariff Growth in Ukraine, kop/kWh France 0,14 Industrial, 1st class Finland 0,15 Industrial, 2nd class Households, consumption to 150 kWh 78,4 Poland 0,15 80,0 70,0United Kingdom 0,15 61,0 61,3 66,8 60,0 Hungary 0,17 45,9 50,0 51,6 48,3 Slovakia 0,17 40,0 36,1 28,0 Austria 0,20 30,0 21,9 20,0 Germany 21,9 21,9 0,26 10,0 Denmark 0,29 2008 2009 2010 2011ESource: Europe‟s Energy portal, DTEK All figures are 1H 2011 actual 10
  11. 11. UKRAINIAN COAL AND GENCOS CONSUMPTIONCoal remains by far the most important fuel for Ukrainian thermal GenCos, accounting for 96% oftheir total fuel (natural gas accounts for 4%). Coal consumption by GenCos, in concentrate, G,DG,T,A grade, thousand tonnes Thermal and anthracite coal mining, in concentrate, G,T,A grade, thousand tonnes Average yearly coal price, per tonne, in concentrate (ash 23%, wet 8.9%) 40000 800 776 35000 593 30000 600 528 25000 456 20000 400 330 15000 222 263 10000 200 34972 25873 32166 35359 27458 30467 34677 31785 30861 29318 31344 29502 28830 32197 5000 0 0 2005 2006 2007 2008 2009 2010 2011E DTEK is a vertically integrated energy company in Ukraine with complete production chain from coal mining to electricity generation and supply. Today DTEK fully covers the needs of its thermal power generation with its own coal. Fuel supply Power plant Distribution 11
  12. 12. CONTENTS DTEK at a glance Ukrainian energy market overview Operations Financials Back-up 12
  13. 13. 1H 2011: СOAL PRODUCTION DTEK runs some of the most efficient and high quality mines in Ukraine, maintaining constant focus on enhancing operations and cost efficiency. ROM output, Labor productivity, Cost of production, kTonnes* Tonne per month/ worker* UAH/ Tonne* Average 57 Average 350 Pavlogradugol 7812 Komsomolets Komsomolets Donbassa 288 90 Donbassa Rovenkiantracite 3834 Krasnoarmeyskaya 90 Pavlogradugol 305 Krasnoarmeyskaya 3245 Pavlogradugol 76 Sverdlovantracite 309 Sverdlovantracite 3241 Sverdlovantracite 60 Rovenkiantracite 376 Krasnodonugol 2896 Rovenkiantracite 50 Dobropolyeugol 384Komsomolets Donbassa 2060 Krasnodonugol 46 Krasnoarmeyskaya 467 Dobropolyeugol 31 Krasnodonugol 518 Dobropolyeugol 1563 DTEK coal mining growth, kTonnes 11 127 11 435 +2,7% 1413 +10,6% 1563 Dobropolyeugol *Dobropolyeugol is consolidated as of January 4th 2011 2036 +1.2% 2060 All figures are 1H 2011 actuals . Source: DTEK, company data Komsomolets Donbassa 7678 +1.7% 7812 Pavlogradugol 1H 2010 1H 2011 13
  14. 14. 1H 2011: THERMAL POWER GENERATION DTEK’s TPPs are among the most efficient on Ukrainian power generation market. Vostokenergo’s TPP`s have highest production volumes and capacity utilization rates. Production volumes, TWh Capacity utilization rate, % * Fuel consumption, WEM tariffs by GenCos**, Gr / kWh kop / kWh Vostokenergo 9, 786 Vostokenergo 54 Dneproenergo 378,9 Zapadenergo 59 Dneproenergo 8 ,476 Dneproenergo 42* Vostokenergo 380,7 Vostokenergo 55 Donbassenergo 35 Centrenergo 397,2 Dneproenergo 52 Centrenergo 6, 730 Centrenergo 34*** Zapadenergo 403,1 Zapadenergo 6, 703 Centrenergo 51 Zapadenergo 33 Donbassenergo 417,8 Donbassenergo Donbassenergo 4, 132 47 * Dnepronergo’s ICUR is given net of suspended oil & gas power units and out of service units (21.84% including all units) ** Investment mark-up is not included ***Centrergo’s ICUR is given net of suspended oil & gas power units, (20,4% including all units )All figures are 1H 2011 actual Source: DTEK, the Main Data Processing Center of NPC Ukrenergo 14
  15. 15. 1H 2011: POWER SUPPLY Electricity transmission & sales, Mwh Nominal vs. Actual transmission losses, % Nominal transmission losses, % Actual transmission losses, % Dneprooblenergo 11 438 16,6 Krymenergo 16,1 Service-Invest 6 525 17,5 Donetskoblenergo 15,6Zaporozhyeoblenergo 4 182 17,7 Odessaoblenergo 13,8 LEO 4 119 12,6 LEO 13,6 14,8 Donetskoblenergo 4 057 Kharkovoblenergo 13,1 9,8 Kievenergo 4 038 Zaporozhyeoblenergo 9,8 11,0 Kievenergo Kharkovoblenergo 3 349 8,9 8,8 DTEK Energougol ENE Odessaoblenergo 8,0 2 790 6,3 Dneprooblenergo 5,0 Krymenergo 1 996 2,3 Service-Invest 1,0 Source: National Electricity Regulatory Commission of Ukraine (NERC)All figures are 1H 2011 actual 15
  16. 16. 1H 2011: COAL & ELECTRICITY EXPORTS DTEK is the largest privately-owned exporter of coal and electricity in Ukraine with ambitious plans to increase export volumes.Coal export revenue grew from USD 65 mln(1H 2010) to USD 231 mln (1H 2011)* Electricity exportdemonstrating 253% growth Coal export Coal export breakdown, thousand tonnes 183% OTHER – 0.27 1 865 mln tonnes 658 Belarus 1H 2010 1H 2011 PolandElectricity export revenue grew from USD 14mln (1H 2010) to USD 146 mln (1H 2011)* EUROPE – 1.05 Slovakia Moldovademonstrating 934% growth mln tonnes Hungary Electricity export, mln KWh Romania Bulgaria 738% 2 138 Turkey 255 MEDITERRANEAN and AFRICAN 1H 2010 1H 2011 COUNTRIES – 0.16 mln tonnes*Using NBU exchange rate as of 30 Jun 2011 – 8,10 UAH per USD 16
  17. 17. POWER PLANTS MODERNIZATION Vostokenergo. Vostokenergo. Kurahovskaya TPP Luganskaya TPP Unit-by-unit retrofit Unit-by-unit retrofit (200+222+225+4х 210 MWt) (3х175+ 4х200+ 100 MWt)  Dismantling of the boiler, turbine, generator,  Dismantling of the turbine, generator, AutomatedModernization Automated Process Control System, and Process Control System, and scrubbers completedresults electrostatic precipitator completed  New equipment: full turbine upgrade (Turboatom,  New equipment: Ovation (Emerson) software- Power Machines), Ovation (Emerson) software- technical unit for upgrading the Automated technical unit for upgrading the Automated Process Process Control System Control System  New transformer, thyristor excitation system (АВВ)  New starter for the generator installed installed  By the end of 2011, one block will be reconstructed.  Two blocks have been reconstructed so far. By the By the end of the program in 2016, modernization of end of 2011, the modernization of one more block five energy blocks will be finished. will be finished. By the end of program in 2016, four more energy blocks will be reconstructed.Investments USD 22, 420 mln USD 72, 778 mln2008-1H 2011 Project start – April 1, 2008 Project start - October 12, 2009Timelines Expected completion (Management‟s view) – Expected completion (Management‟s view) – November-December 2016 November-December 2016 17
  18. 18. AMBITIOUS CAPEX PLANS Total Capex, USD mln* Capex Coal mining, USD mln*700 300 281 278 572 263 261600 556 49 250 45 56 486 22 24 211 63500 22 420 200 39 371400 254 238 21 139 150 128 144 28 186 116300 122 103 118 100200 50 90 93 263 281 278 261 69 78 82100 211 0 0 2011E 2012E 2013E 20114E 2015E 2011E 2012E 2013E 2014E 2015E Coal Power generation Distribution Mining development Equipment purchase Major overhaul Capex Power generation, USD mln* Capex Power distribution, USD mln* Partially funded via tariff investment mark up Fully funded via tariff investment mark up 300 Other Modernization Including investment mark-up 40 254 250 238 Grid modernization Other 32 30 28 186 27 200 3 24 31 212 22 22 21 2 150 118 201 122 20 3 2 2 100 33 25 155 25 10 20 22 19 19 50 96 85 - 0 2011E 2012E 2013E 2014E 2015E 2011E 2012E 2013E 20114E 2015E * For comparison, UAH values of exact planned CAPEX are converted into USD at UAH 7.91/USD 18
  19. 19. CONTENTS DTEK at a glance Ukrainian energy market overview Operations Financials Back-up 19
  20. 20. OUTSTANDING FINANCIAL PERFORMANCE Revenue, UAH mln EBITDA, UAH mln 25 000 8 000 20 000 74% 6 000 92% 15 000 24 294 4 000 10 000 18 453 6 141 15 009 5 068 2 000 5 000 10 625 3 565 2 643 0 0 2009 2010 1H 2010 1H 2011 2009 2010 1H 2010 1H 2011 Net profit, UAH mln Net operating cashflow, UAH mln 4 000 3 000 71% 3 000 203% 2 250 1 500 2 000 2 857 2 201 3 235 2 993 750 1 000 2 146 1 288 856 987 0 0 2009 2010 1H 2010 1H 2011 2009 2010 1H 2010 1H 2011All figures are 1H 2011 actual 20
  21. 21. EBITDA GROWTH MAIN DRIVERS 2 199 1H 2011, actuals 2010, (-) 5 373 1H 2010, fact 1H 2010, actuals fact 5627 30 2 643 Volumes Price/Mix Cost of Sales Other 5 068,0All figures are 1H 2011 actual 21
  22. 22. HEALTHY DEBT PROFILE Loan portfolio, USD mln Loan maturity profile*, USD mln 800 600 691 524 604 600 554 450 485 400 300 200 150 48 9 20 7 0 0 2008 2009 2010 1H 2011 2011 2012 2013 2014 2015 Debt currency profile, USD mln Loan portfolio by types of financing, USD mln EUR ECA financing 8% 10% USD 8% 10% Eurobond UAH Credit lines 82% 82% * Undiscounted principal amount repaymentAll figures are 1H 2011 actual 22
  23. 23. LOW LEVERAGE LEVELS Key leverage ratios Credit ratings Ratio 2008 2009 2010 1H 2011 Rating Outlook Last review Gross Debt* Fitch 1.1 1.2 0.9 0.7 LT FC IDR B Positive July 2011 Adj EBITDA** LT LC IDR B+ Positive July 2011 Net debt*** 0.9 1 0.6 0.4 Moodys Adj EBITDA** LT CFR B2 Stable Nov 2010 Adj EBITDA** 13 8 13.5 23.8 Interest expenses “The ratings reflect DTEKs leading positions in the Ukrainian• Gross debt - bank loans, accrued interest and Eurobonds coal mining, thermal power generation and distribution sectors…** Adjusted EBITDA represents profit for the year after excluding the following DTEK continues to benefit from a high level of integrationnon-operating income statement items: foreign exchange losses less gainsfrom borrowings, certain finance costs, income tax expense, depreciation and between its coal-mining and coal-fired power generationamortization and impairment of property, plant and equipment. business units, which helped it maintain its operating margins…“*** Net debt - bank loans, accrued interest and Eurobonds less cash and cashequivalents. Calculated for information purposes only. Fitch Ratings, 2011 23
  24. 24. DTEK’S LEVERAGE IS WELL BELOW INDUSTRY PEERS Debt/EBITDA, 2010 actual DTEK‟s leverage is well below the industry average, which provides flexibility in delivering 5.15 strategic growth objectives and puts the company in a comfortable position in an 4,2 environment of tight debt markets. 3,9 3,9543 Average 2.6 2,8 2,1 2,12 1,81 0,90 DTEK EnBW RWE Endesa E.ON EDF Enel Verbund EDPAll figures are 2010 actual. Source: DTEK, companies‟ data 24
  25. 25. CONTENTS DTEK at a glance Ukrainian energy market overview Operations Financials Back-up 25
  26. 26. SELECTED FINANCIALS 2005 – 2010, UAHmln UAH 2005 2006 2007 2008 2009 2010Income statement Revenues 3 784 5 049 8 969 12 969 15 009 24 294Sale of steaming and coking coal 1 714 1 018 1 607 3 407 4 678 9 612Sale of electricity to electricity pool 2 062 3 456 4 489 5 665 5 543 7 845Sale of electricity to final customers 0 538 2 400 3 736 4 672 6 208Other sales 8 37 473 161 116 58 Operating expenses 3 007 3 792 6 544 9 512 11 444 18 153Cost of electricity purchased for resale 0 505 2 211 3 519 5 107 9 628Raw materials 1 338 773 1 263 1 799 2 325 3 787Staff cost, including payroll taxes 1 330 1 637 1 913 3 015 3 020 3 560Other expenses, net 339 876 1 157 1 179 992 1 178EBITDA 777 1 257 2 425 3 457 3 565 6 141 EBITDA margin 20.5% 24.9% 27.0% 26.7% 23.8% 25.3%Depreciation 277 290 771 1 080 1 429 1 479EBIT 500 967 1 654 2 377 2 136 4 662 EBIT margin 13.2% 19.2% 18.4% 18.3% 14.2% 19.2%Net profit 268 493 1 193 119 856 2 857Balance sheetNon-current assets 3 353 7 468 11 383 15 587 16 177 18 763Current assets 640 1 299 2 019 2 483 4 037 6 874 - out of that cash and cash equivalents 86 237 368 595 739 1 693 Total assets 3 993 8 767 13 402 18 070 20 214 25 637Shareholders equity (including minority) 2 388 5 181 7 069 9 989 10 793 13 280Interest bearing debt 145 858 1 947 3 731 4 428 5 502Other liabilities 1 460 2 728 4 386 4 350 4 993 6 855 Total liabilities 1 604 3 586 6 333 8 081 9 421 12 357 26
  27. 27. SELECTED FINANCIALS 2005 – 2010, USDmln USD 2005 2006 2007 2008 2009 2010Income statement Revenues 738 1 000 1 776 2 462 1 926 3 061Sale of steaming and coking coal 334 202 318 647 600 1 211Sale of electricity to electricity pool 402 684 889 1 076 711 989Sale of electricity to final customers 0 107 475 709 600 854Other sales 2 7 94 31 15 7 Operating expenses 587 751 1 296 1 806 1 469 2 288Cost of electricity purchased for resale 0 100 438 668 655 1213Raw materials 261 153 250 342 298 477Staff cost, including payroll taxes 260 324 379 572 388 449Other expenses, net 66 174 229 224 127 148EBITDA 152 249 480 656 458 774 EBITDA margin 20.5% 24.9% 27.0% 26.7% 23.8% 25.3%Depreciation 54 57 153 205 183 186EBIT 98 192 328 451 274 587 EBIT margin 13.2% 19.2% 18.4% 18.3% 14.2% 19.2%Net profit 52 98 236 23 110 360Average x-rate USD/UAH 5,12 5,05 5,05 5,27 7,79 7,94Balance sheetNon-current assets 664 1 479 2 254 2 024 2 026 2 357Current assets 127 257 400 322 506 863 - out of that cash and cash equivalents 17 237 73 77 93 213 Total assets 791 1 736 2 654 2 347 2 531 3 220Shareholders equity (including minority) 473 1 026 1 400 1 297 1 352 1 668Interest bearing debt 29 170 386 485 555 691Other liabilities 289 540 869 565 625 861 Total liabilities 318 710 1 254 1 049 1 180 1 552Average x-rate UAH / USD 5,05 5,05 5,05 7,7 7,99 7,96 27
  28. 28. ENERGY MARKET OF UKRAINE: REGULATORY FRAMEWORKS Power generation market is regulated by:Regulatory framework • Ministry of Energy and Coal Industry of Ukraine (regulator) • National Electricity Regulatory Commission of Ukraine (regulator) • Energorynok (single state operator). Investments are included in tariffs for all NPPs, HPPs and CHPPsInvestment The tariff for TPPs includes:compensation model • 80% of project implementation costsfor GenCos • 95% of environmental investmentsInvestment Currently, the regulator approves an annual figure for investments and includes itcompensation model in the tariff.for distributioncompanies Annually, the regulator sets a losses standard for each company. If actual lossesLosses compensation are lower, it translates into profit; if higher, it translates into losses.model Source: DTEK 28
  29. 29. UKRAINE ЕNERGY MARKET: REGULATION MODELS EVOLUTIONCurrent model of the Wholesale Energy market (single buyer pool) Bilateral contracts market with a balancing market Price claims Ministry of energy GenCos Ministry of energy NERC Consumers Suppliers by regulated tariff State TPP NERC System‟s operator: State company „Ukrenergo‟ Generation NC ECU Distribution NC EKU Bilateral contracts Electricity DTEK: System‟s operator: market transmission and State company Bilateral supply Qualified Vostokenergo DTEK: „Ukrenergo‟ contracts Direct consumers Service-Invest DTEK Energougol market contracts installed Suppliers by ENE Tariff approved by NKRE capacity Exchange unregulated market „24 tariff State oprartor VSE Export hours prior‟ „Energorynok‟ AES NPP Balancing market Balancing installed market HPP Other suppliers by Suppliers by Unqualified regulated tariff capacity regulated tariff consumers CHPP Export HPP Balancing mechanism State operator HNPP Other GenCos „Ukrinterenergo‟ Independent suppliers by including WPP non-regulated tariff System‟s operator: State company „Ukrenergo‟ ‟ Advantages of the current model: New market model characteristics: • Simple in arrangements and price-setting • Practically guaranteed purchases of electricity from generating • The new market mechanism is based on the concept of bilateral contracts companies. between generating companies and electricity suppliers • Suppliers, at an unregulated tariff, supply electricity to qualified consumers, Drawbacks of the current model: and suppliers, at a regulated tariff, supply it to unqualified consumers • High level of administrative interference • The process of centralized planning and managing of electricity generation • Imperfect price-setting system, cross-subsidies schedules by the market is replaced with a process of load schedules being • No market system and ancillary services. compiled based on consumer use, supplier load and volume • The balancing mechanism provides for balancing deviations in the declared Advantages of the new market model: amounts of electricity generation and actual consumption. The operator • The market is competition-based controls fulfillment of load schedules and can manage imbalances in the • Low administrative interference system. • Favorable investment climate. Source: DTEK 29
  30. 30. UKRAINE ENERGY MARKET: TRANSITION TO RAB MODELSince 2007, The National Electricity Regulatory Commission, together with a group of foreign consultants supported by theEuropean Bank for Reconstruction and Development, has been implementing a project to introduce an incentive tariff-settingsystem in the electricity distribution market in Ukraine.The 2010-2014 Economic Reforms Programme and the 2011 National Action Plan envisage switching to incentive-based tariff-setting. The following has been planned for 2011, but has not been implemented so far:• Introducing amendments to the Law On Natural Monopolies• Designing and introducing methodology for incentive regulation – approval of the methodology by NERC.The baseline scenario assumes that the new model will start functioning in 2013. Switching to the new tariff regulation, whichshould stimulate companies to improve their efficiency and investment attraction, should be accompanied by transmission andsupply tariff growth. STAGE I STAGE II STAGE III 2011 2012 2013 2014 2015 2016 • Stage where the incentive tariff- • The incentive tariff-setting method• Preparing the tariff-setting has been fully introduced. mechanism. setting mechanism is in place, but• Amending administrative-regulatory market conditions allow participants documents. to adapt to the new rules without considerable financial risks. Source: DTEK 30
  31. 31. MEMBERSHIPEU-Ukraine Eurelectric European American European UN Global US-UkraineBusiness Business Chamber of Association for Compact BusinessCouncil Association Commerce in Coal and Council Ukraine Lignite 31
  32. 32. OPERATING ASSETS OWNERSHIP Coal production Power generation Electricity supplyDTEK Pavlogradugol – 99.92% Vostokenergo – 100% DTEK Energougol ENE– 91.12%DTEK Mine Komsomolets Donbassa-94% Wind Power – 100% Service-Invest – 100%DTEK Dobropolyeugol – 49 years lease Dneproenergo – 47.55% DTEK Power Trade – 100%DTEK Dobropolskaya CPP – 60.06% Kievenergo – 39.98% Kievenergo – 39.98%Pavlogradskaya CPP – 99% Zapadenergo – 25.06% Donetskoblenergo – 30.59%Kurakhovskaya CPP – 99%Mospinskoye CPP – 99%DTEK Oktyabrskaya CPP – 60.85%DTEK Trading – 100% 32
  33. 33. This document may contain forward-looking statements related to planned measures or future financial indicators of DTEK.Accordingly, actual results may differ materially from those expressed or implied by the forward-looking statements. We undertake Спасибо за внимание!no obligation and do not intend to update these forward-looking statements to reflect events or circumstances occurring afterpublication date. You are cautioned not to place undue reliance on these forward-looking statements, which are pertinent only as ofthe date of this document. By their nature, forward-looking statements are subject to numerous assumptions, risks anduncertainties. 33

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